Banking refers to the system of financial institutions, such as banks and credit unions, that provide various financial services to individuals, businesses, and governments. Banking services mainly include accepting deposits, lending money, facilitating transactions, and offering various financial products like savings accounts, loans, and credit cards.
Banking plays a crucial role in the economy by facilitating the flow of money and enabling economic activities.
Banks in India offer a wide range of banking services, such as savings and checking accounts, loans (personal, business, and mortgages), credit cards, investment services, and electronic banking options like online and mobile banking.
Some of the major functions of banks are mentioned below:
The Banking System in India is divided into several types, each serving specific functions and purposes. The table below represents the different types of banks in India and how it is further divided:
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Banking Classification in India |
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Types of Banks |
Sub-types |
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Central Bank |
- |
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Commercial Banks |
a) Private Sector Banks b) Public Sector Banks c) Regional Rural Banks d) Foreign Banks |
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Co-operative Banks |
a) State Co-operative Banks b) Urban Co-operative Banks |
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Payment Banks |
- |
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Small Finance Banks |
- |
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Scheduled Banks |
- |
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Non-scheduled Banks |
- |
The Reserve Bank of India (RBI) serves as the Central Bank of India and is responsible for regulating and controlling the monetary and banking system in the country.
These are the most common types of banks and include public sector banks, private sector banks, and foreign banks. They provide various services like savings and current accounts, loans, and investments.
These are the most common types of banks and include public sector banks, private sector banks, and foreign banks. They provide various services like savings and current accounts, loans, and investments.
The table below shows a few examples of Commercial Banks in India.
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Commercial Banks in India |
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Public Sector Banks |
Private Sector Banks |
Foreign Banks |
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Here is a list of public sector banks in India:
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Here is the list of private sector banks in India:
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Here is a list of foreign banks that operate in India:
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A Co-operative Bank is registered under the Co-operative Societies Act of 1912 and is run by an elected managing committee. It works on a non-profit, no-loss basis and mainly serves entrepreneurs, small businesses, self-employment, and more in urban areas.
In rural areas, it mainly functions to finance agriculture-based activities like farming, livestock, and hatcheries. There are mainly two types of Co-operative Banks:
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Types of Cooperative Bank |
Description |
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State Co-operative Banks |
A State Co-operative Bank is a federation of the central Co-operative banks that will act as a custodian of the Co-operative banking structure in the State. |
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Urban Co-operative Banks |
The Urban Co-operative Bank is the primary Co-operative bank located in urban and semi-urban areas. The banks essentially lent to smaller borrowers, and businesses centred around a community, locality, and more. |
The payment banks are a relatively new banking model in the country that has been conceptualised by the RBI. This bank is allowed to accept a restricted deposit. This amount is limited to Rs. 1 lakh for a customer. The bank also offers services such as ATM cards, net banking and more.
These banks primarily serve the unserved and underserved sections of the population, including small businesses and low-income individuals.
This type of bank is licensed under Section 22 of the Banking Regulation Act 1949, and it is governed by the Provisions Act of 1934.
Here are a few examples of Small Finance Banks in India:
These banks are covered under the 2nd Schedule of RBI Act 1934, and they need to have a paid-up capital of Rs. 5 lahks or more.
The non-scheduled banks are local area banks that are not listed in the 2nd Schedule of the RBI Act 1934.
Banks offer several types of bank accounts to cater to different financial needs. These bank accounts vary from one another based on the purpose, transaction frequency and location.
Given below are the common types of bank accounts in India: